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Roth IRA vs 401K: Which Makes the Most Money
Choosing between a traditional retirement account and saving in a Roth IRA can be challenging. While both options have tax benefits they differ greatly. Understanding which option matches your financial situation can maximize your savings.
Employers can offer a 401(k) retirement savings plan where you invest a certain percentage each month. The good thing about 401(k) is that your employer can match your investment to a certain amount.
It’s a good idea to check with your employer how much that amount is to so you can make the most of your money. Money is collected after your income is taxed as well. With a 401(K) is if you decide to move on you can move your money to an IRA.
A Roth IRA (Individual Retirement Arrangement) can be opened on your own. This retirement savings account collects after-tax money.
Meaning you can continue to grow your savings tax-free allowing you to withdraw tax-free.
This can be a great option for anyone whose employer doesn’t offer a Roth IRA or is who is self-employed, but you can always have both a 401 (k) and Roth IRA to make the most of your savings.
While both options allow you to save for your retirement, they have unique attributes.